Tata Communications Stock Hits 52-Week Low- Market Challenges & Future Growth Outlook
Business and Industry Overview
Tata Communications, initially known as Videsh Sanchar Nigam Limited, was a government-owned telecommunication company. It was started on March 19, 1986, as VSNL. In 2002, the Indian government sold 25% of its shares, and Tata took control of the company. Tata Communications helps businesses around the world with digital services like the internet, cloud storage, mobile connections, and security. It works with 7,000 companies, including 300 of the world’s biggest businesses (Fortune 500). The company plays a big role in global internet traffic. It handles 30% of the world’s internet data, connects 80% of cloud service providers, and serves 4 out of 5 mobile users worldwide. It owns the largest underwater internet cable network, linking 190+ countries. In India, it is building the biggest Internet of Things (IoT) network, which will reach 2,000 communities and impact 400 million people. Tata Communications is listed on India’s two major stock exchanges (BSE and NSE). For over 25 years, it has helped India’s digital growth. In 2021, the company made ₹17,100 crore in revenue. The company provides network services and software-defined network platforms, such as Ethernet, SD-WAN, content delivery networks (CDNs), the internet, Multiprotocol Label Switching (MPLS), and private lines.
India has the second-largest telecom market in the world. The number of mobile and internet users is growing fast. As of May 2024, India had 1,168.95 million mobile users. The number of home and office internet users was 41.31 million. By December 2023, India used a huge amount of internet data (50 million TB). Mobile internet usage increased 4% from September to December 2023. Most people used 4G (86.66%) and 5G (12.59%), while 2G and 3G were used very little. The telecom industry made ₹2.4 lakh crore (US$ 29 billion) in 2024. In the next five years, as mobile internet becomes cheaper, 500 million more people in India will start using the internet, creating new business opportunities. As of February 2025, Tata Communications has a market cap of ₹423.59 billion. Its market share has decreased over the past few years, but it still is a big player in the market.
Latest Stock News
Tata Communications’ stock hit a new 52-week low, showing struggles in the telecom sector. The stock has been falling for the past two days and has dropped a lot over the past year. It is also performing worse than the overall market and is trading below important price levels.
In Q3 FY25, the company made a profit of ₹131.7 crore, compared to a loss of ₹27 crore in Q3 FY24. The company said that higher digital revenue and better profit margins helped it recover. It also sold its stake in TCPSL to TSI India as part of a review of non-core businesses.
Management reported a 50% increase in large business deals compared to last year and strong order growth. They expect Q4 to show good revenue growth. However, despite this, Tata Communications’ stock has dropped 12.5% this year due to overall market weakness.
Potentials
Tata Communications is a leading telecom and digital services provider with operations in 190+ countries. It is partnering with AI company CoRover.ai to expand its digital solutions for businesses and government departments. They will use Tata Communications’ cloud technology and CoRover.ai’s AI solutions to create smart digital services. Sovereign AI means a country developing its own AI using its own data, infrastructure, and workforce. This partnership will help protect local data and follow government rules, especially with India’s new Digital Personal Data Protection (DPDP) Act. Many companies now prefer Indian-made data storage and management solutions to stay legally compliant. Tata Communications is already in talks with the central and state governments to use these AI solutions. Some projects are in a testing phase and will soon expand. The partnership will develop AI-powered applications for the public and businesses, improving services like e-governance, digital infrastructure, and business operations (such as inventory management).The AI solutions will support text, voice, and video in 14 Indian languages, including Hinglish. This will make technology more accessible to a larger population.
The company’s stock price is very high compared to its actual worth, making it expensive for new investors. Its sales growth has been quite slow over the past five years, which is a concern. Additionally, it has a large amount of future financial obligations (₹13,916 crore in liabilities), and there are signs that it might be adjusting its financial numbers to make profits look better. However, the company has been highly profitable, showing a strong return on equity of 126% over three years, and it maintains a good dividend payout of 40.8%, rewarding its investors. While it offers good returns, its high price, slow growth, and financial risks make it a bit risky for new investments.
Analyst Insights:
Key Financial
- Revenue: ₹5,798 crore (Total money the company earned).
- PE Ratio: 37.1, meaning the stock is expensive compared to its profits.
- Market Value: ₹41,329 crore, showing it is a big company in telecom.
- Return on Equity (ROE): 126% (last 3 years), showing strong profit-making ability.
Tata Communications is a strong company with good profits and big plans for AI, cloud, and digital solutions. But slow sales growth, high stock price, and financial risks are concerns. The stock looks expensive, and it has not performed well in the market recently.
If you already own the stock, keep it for now but watch its performance.New investors should wait for a better price before buying. The company has good future potential, but right now, it may not be the best time to invest.